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MERALCO as the monopoly.

October 23, 2008

According to Criticisms of a Real Sane Genius Meralco, the electricity distribution company in the Philippines, is trying to merely pull a fast one on consumers. The newswires are burning with the imminent refund of a few billion pesos worth of refunds to consumers who have been overcharged by Meralco in recent years.

Meralco is basically an electricity distribution company. It serves most of the archipelago, though there have been electricity cooperatives that have sprung up here and there these have not been enough to challenge Meralco’s hold on the distribution of electricity. 

In recent months Meralco also has been under attack by the GSIS as the Government arm tried to take-over Meralco from the Lopez clan. 

Though Meralco is being traded publicly in the Philippine Stock Exchange it is still subject to the control of the Lopezes. The absolute control of this clan over Meralco shows that Meralco is still operating as a monopoly as against other distributors. Likewise, Meralco in 2003 up until 2006 increased rates as “Purchasing Power Parity adjustments” and there was nothing that government can do about it. It is only today that Meralco is trying to refund the earnings but tagging it along with a 36% increase in rates for the distribution. 

The company is obviously vested with great public interest, Metro Manila will grind to a halt should Meralco suddenly decide not to serve its consumers. Yet it is painfully obvious that although Meralco, should for all intents and purposes, be taken over by the government the Lopezes are still reaping huge profits from running it like their own sole proprietor business. Surely the government should attempt to break Meralco apart instead of allowing it to continue as a behemoth. There are other ways of breaking up such a monopoly. Some remedies I could think of are plain transparency, spinning-off of Meralco business units or forcing each sector of Meralco to be a localized distributor. There are several other ways than trying to take over Meralco through stock buy-outs. 

Posted by domesticatedman at 2:45 pm | permalink

Previous Comments

The reason behind the dramatic rate hike:

http://yogon.multiply.com/journal/item/452/The_truth_behind_electricity_rate_hikes

Posted by Saturnyne at October 25, 2008, 2:09 pm

Thanks for the comment and it was very informative as well!

Posted by domesticatedman at October 26, 2008, 12:44 pm

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